Analyst Conference Summary



conference date: April 29, 2010 @ 6:00 AM Pacific Time
for quarter ending: March 31, 2010 (first quarter)

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Forward-looking statements

Overview: Excellent results, continuing rapid revenue and profit growth. Guidance for full 2010 increased.

Basic data (GAAP):

Revenue was $791.3 million, up 4% sequentially from $761.0 million, and up 37% from $576.2 million in the year-earlier quarter.

Net income was $234.4 million, down 11% sequentially from $254.2 million, but up 44% from $162.9 million.

EPS (earnings per share) were $0.50, down 7% sequentially from $0.54, but up 43% from $0.35 year-earlier.


Full 2010 revenue up about 25% y/y to range of $3.3 to $3.4 billion (guidance increased by $100 million). Non-GAAP EPS range now $2.60 to $2.65 (guidance increased $0.05/share). Guidance includes expected hit from healthcare reform.

Conference Highlights:

An exceptional first quarter, setting records. Aggressively investing in the pipeline. "We are the fastest growing pharmaceutical company."

Senior management succession plan announced. Sol Barer will move from CEO to Executive Chairman of the board. Robert Hugin, currently President and COO, will become CEO.

Healthcare reform legislation had a negative Q1 impact of about $4 million, with full year impact expected between $35 and $40 million, largely due to an increased Medicaid rebate. In 2011 negative impact of $80 to $90 million as "donut hole" discount kicks in, but there is some uncertainty. May be a benefit from more patients having healthcare coverage.

Revlimid revenues were $530 million, up 46% from year-earlier. $305 million revenues in U.S., $225 international. Revlimid met it primary endpoint in the Phase III IFM multiple myeloma study, and Phase III MDS-005 trial in myelodysplastic syndromes was initiated. Still looking for market approval for Revlimid in Japan in 2010. Duration of therapy is increasing, with U.S. share at 40% in first line and 45% in second line multiple myeloma.

Vidaza revenues were $120 million, up 60% from year-earlier. Appealing British decision against Vidaza. Extending share gains in the rest of Europe.

Thalomid revenues were $104 million, down 9% y/y. Focalin and Ritalin combined revenues were $29.7 million, up 10% y/y.

Product revenue total was $759.4 million; collaboration $2.4 million; royalty revenue $791.3 million.

Non-GAAP claims: net income $295 million, EPS 63%, up 43% from year-earlier.

Cash and equivalents balance ended at $2.95 billion.

Cost of goods sold was $61.9 million. R&D $204.7 million. Selling, general and administrative expense was $208.0 million. Amortization of intangibles acquired was $41.6 million. $4.9 million acquisition related expense. Leaving operating income of $270.2 million. Interest and other income $17.4 million. Income tax provision $53.9 million.


ASCO (American Society of Clinical Oncology) abstracts planned for Revlimid, Vidaza, Thalomid, Istodax, Pomalidomide and Amrubicin. Commercial launch of Istodax for Cutaneous T-Cell Lymphoma initiated in the U.S. The is a new collaboration with Aglos Pharmaceuticals for cancer metabolism based therapies.

PDA-001 immunomodulatory therapy did well in a Phase I study; Phase II studies should be launched in 2010. All together Celgene seeks to advance more than 20 clinical trials in 2010. Further Apremilast and Pomalidomide trials are to be initiated. Amrubicin Phase III small cell lung cancer trial should be completed. JNK CC-930 for idiopathic pulmonary fibrosis and discoid lupus erythematosus to initiate Phase II trial.

Multiple products with significant revenue potential may enter the market over the next five years.


How do you see pricing versus duration of maintenance? It is a good question, we are likely to differentiate within markets because of different reimbursement policies.

Healthcare reform tax? We believe the tax will not apply to us, but it is not entirely clear yet.

IFM data? ASCO will be the first presentation of that data. Post stem-cell transplants have generally not been treated. Hopefully we will see a change in the paradigm after the data comes out.

Revlimid breakdown? Myeloma percentage constant in low 80%, MDS at 10% to 15%, other still around 5%. Can't tell how much is maintenance.

Do you need to file for approval in U.S. for post-transplant setting? Data needs peer review and publication. But the data will be widely available to physicians to make their judgments about what is best for patients.

Vidaza loss of orphan drug status? Regulatory exclusivity in U.S. extends to May 2011. In Europe to 2018. About half revenue has been U.S.

Co-payment assistance program? We expect to see the co-payment assistance to continue to be important, but Celgene's contribution should go down starting in 2011 because of better coverage under the new law.

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Copyright 2010 William P. Meyers